Clear Eyed Capitalist

Archive for June, 2008

I’m back to reading a book called Manhattan For Rent, 1785-1850, by Elizabeth Blackmar. I overheard intellectual greats Peter Kinder and Joy Anderson discussing their favorite books at a conference a year ago and made notes. This book helps shed important light on gentrification. “Far from fulfilling the egalitarian potential of abundant land distributed to independent proprietors, the neutral market had carried a new class dynamic into the process of residential neighborhood formation, and it persisted throughout the rest of the century. This dynamic rested on three conditions: the artificial scarcity created by concentrated ownership of vast stretches of vacant land; the structure of the competitive housing market and particularly the purchasing power that permitted elite New Yorkers to claim particular blocks for their exclusive use; and the diminishing power of mechanic families to acquire property –in other words, the power of property to reduce the value of labor.” … “Propertied New Yorkers’ control of the land supply and ability to determine effective demand raised the price of proprietary independence for the city’s artisans.” like us still today, they “seldom directly confronted the question of what these housing issues had to do with the larger structures of social power.” And instead, over time, we’ve made poverty synonymous with immorality and thus conveniently and circularly deserved.

This first section really got me thinking about land and capital. I really don’t believe in classic supply and demand and “fair” pricing – there’s just too much friction. The first concrete example I found prior to this book was apartment pricing – when the market is overbuilt, rents don’t go down in clean response to the market, because it turns out the rent pricing is built into the financing when the building is built. Instead, owners offer “concessions” like free services or discounted move in costs. With both land and capital, there’s not the same supplier pressure to negotiate as there is with a product that can lose value like technology, fashion, food or events, all of which have a time-value. People talk about the “time value of money” and certainly inflation creates some pressure, but once you have an excess of capital (or land) beyond that which you need to live, you have a negotiating power that can alter the market rather than merely participate in it. That’s what was happening on Manhattan in around 1800, that landowners who controlled vast stretches of usable land, sat on it while prices drove up on what land was available in the marketplace, and then parceled it out at high prices. I also see a dynamic of a dysfunctional market because of capital that doesn’t “need to work” in angel investing.

I got busy with school, but I picked the book back up again recently, and hit the phrase where she refers to the shift of land being allowed to circulate as capital. It seems like this is a key to gentrification – that government became funded by property taxes and thus property owners gained greater say in government, and then amenities like water, sewer & parks became funded via property taxes, so they would only be put in if a corresponding increase in property values justified their cost. The book talks about a period of park establishment, and how landowners in low-rent neighborhoods resisted creation of a park because it would have required taking some of their property, and they didn’t think they could raise rents enough to justify it. Where they could raise rents, the poor were left with nowhere to go.

It makes me think about Hernando De Soto and his book (The Mystery of Capital) on how lack of clear land titling prevents folks in Latin America from building fortunes because they can’t effectively use land as capital. He advocates for fixing that, and many people (both right & left) think he’s a genius. But it suddenly strikes me as the perfect example of how a few will gain significantly financially – those who establish clear titles and take control, at the expense of the current proprietors & residents (who will be recategorized as squatters or forced to pay new rents). I wonder if there’s a “homelessness” problem in Peru – one of the countries Hernando De Soto talks about. Contrast that lack of clear title and people setting up shops & homes where they can, with privatized public space like 2200 Westlake (not that I have a particular issue with them, but it was recently built and is close to me). I suppose there would be (and have been) homes and small businesses in odd lots in Seattle if we were not now doing regular shakedowns of this clearly titled property in the name of its owner “The Public”.

In the first paragraph where I quote from the book, there was one more point that I’ve been chewing on, and that is the point that property owners could keep renting proprietors from making the leap to being owners themselves by keeping rents sufficiently high. Sometimes there’s market pressure to compete on rents, but the overall goal to maximize return leads most property owners to effectively work together because keeping the property market tight benefits both eventual sellers and current landlords. So as long as there’s no pressure to make land be economically productive, very wealthy owners can continue to hoard it as a resource, benefiting property owners as a class at the expense of non-property owners as a class. My next thought, is that market pressure to compete comes from a hungry rising class, which is disappearing in our hourglass economy and thus making it easier for the wealthy segments to use capital as negotiating power and not need to compete.

The Next Form of Democracy: How Expert Rule Is Giving Way to Shared Governance — and Why Politics Will Never Be the Same by Matt Leighninger (Author)

I attended a lecture at Portland city hall, basically book tour for this book, Wed April 30th 6pm. It was great!

Matt is the executive director of the Deliberative Democracy Consortium and has been a consultant to the CDC, the Study Circles Resource Center, the National League of Cities. He also wrote: The Seven Deadly Citizens: Moving From Civic Stereotypes to Well-Rounded Citizenship The Good Society – Volume 13, Number 2, 2004, pp. 33-38

Matt started with the quote: “an expert = someone from out of town”. He started out working for a foundation on community engagement issues, began working across communities and sharing lessons across communities. He sees the same problems over and over again. One of those problems is the relationship between citizens and their government.

Past to current: there’s a parent-child relationship (attitude?) between government and citizens

Future: citizens want an adult-adult relationship

He sees that government representatives experience citizens as either absent or angry. Officials want to be respected & trusted, and citizens want to be heard. Citizens are also seeking social connection. Non-profits often work to fill the gap, but are many single-issue/focus groups competing for community involvement and attention, resulting in a very fragmented effort which is overwhelming to citizens. His phrase: we need “mixed-use public involvement” (like mixed-use land development). How he sees engagement happen now:

Temporary projects – last 6-12 months, people get engaged and then disband.

Permanant structures – neighborhood councils etc, but these can fail to provide true recruitment/engagement [enrollment is the word I’d use – SM]

Matt believes we need to combine the two.

He identifies 4 key principles for success:

1) recruitment [enrollment] – reach out and engage people where they are and through what they’re already involved in.

He then reviewed a few Mini Casesproblem: land use – people are looking for control over their surroundings, issues are contentious and difficultsolution:“neighbors building neighborhoods” in Rochester, NY.
NBN uses NeighborLink Online to let neighbors see benchmarks & current measurements, GRUB – greater rochester urban bounty is a urban farm project. Is it successful? rochester keeps losing tax base to neighboring areas and has had to cut funding so maybe not?

problem: race & segregationsolution:“Lee County Pulling Together”
Started from a church having community dialogues. Ended up identifying a need for more services in a low income neighborhood and getting a shopping center built. Key Lesson: sharing the responsibility of governance means sharing our differences.

problem: citizens becoming anti-vaccine and not trusting governmentsolution: “what to do about the flu?”
study circles of citizens examine vaccination challenges in pandemic situations and make recommendations to local government for emergency planning. gets people educated about the issues.

solution: “community chat” became “village foundation”
Neighbors coming together to talk about shared issues eventually began developing ways to meet those needs from within the neighborhood: neighborhood watch, got a neighborhood school established.

The Future
-We need to update legal frameworks, open meeting laws and advisory requirements have become barriers to meaningful commmunity involvement though their goals were open-ness and transparency. In the LA area in particular things have gotten problematic
-Engagement needs to combine the social and cultural with the political to be meaningful for people.
-Need to follow the 4 key principles

the goal: community engagement that is equitable, egalitarian, efficient, deliberate and decisive

There were a number of Q&As, most specific to Portland, but one answer he gave particularly caught my attention as matching a feeling I’ve had:
Q- youth engagement?
A – Sometimes youth projects have a flavor of passing the buck: “We can’t solve racism in our generation so let’s get the next generation to do it”. Cross-generational projects are great, but you’ve got to have youth leadership if you want to have youth engagement.

I also found this answer intriguing:

Q – what about government & race issues?
A – there’s an unintended legacy of the “I have a Dream” speech which is the idea that questions of difference can be resolved and there’s a promised land where we no longer have issues and we just all live happily together. The reality is that differences are always going to be there as both an opportunity and challenge; the role of government needs to be that of continually facilitating constructive engagement around differences and helping us move forward.

and these are all very sensible advice

Q – facilitation & meeting planning
A – definitely facilitation is a needed skill, people need training. the Rochester project has a training academy that trains citizens & civic servants together, so they build relationships as well as skills. Robert’s Rules are a pain, Robert can get lost. What matters: ground rules, safe space, experience & story sharing, ranges of options to choose from.

Q- how to engage the working class?
A – you need to reach out to them, be flexible on times & locations (church basements, hair salons). emphasize content that is meaningful and relevant, ensure their participation is genuine and not token, make sure they’re heard. Shorter meetings aren’t the answer, everyone is busy, it’s about making it worthwhile, so longer might be better.

Q – Donna Beagle, local expert on poverty, says to emphasize relational connections and avoid being place-based because populations are too mobile. how to deal?
A – Focus on what people belong to, what networks or groups. Have meeting structure but don’t be rigid – facilitate & follow what they want.

Q – meeting structure advice?
A – tie back again to “must include social & cultural with political”. Meet at local schools where people can see the kids school projects hung up, catch up with their neighbors and eat. Mix up the content, so have working monthly meetings but every 6 months its a big celebration with minor report-out, to have broader appeal. attach to a social event like the weekly football tailgate party – have 30 minutes of neighborhood meeting beforehand. Small group work, large group punctuation

Q – running government as a business
A – Runs government into the ground. simply can’t make everything into a fee-for-service. need to confer legitimacy on citizen participation. this is where open meeting laws get tricky, citizens don’t feel valued, but personal process isn’t super open & transparent. Challenge!

I definately recommend his book, there’s more there. He has an interesting chapter where he talks about Saul Alinsky and how classic community organizing focuses on building a power base outside of government and holding negotiations, very much a “government is them” approach as opposed to the participatory approach he believes we are capable of today, particularly supported by technology. It’s easy to dismiss that as unfair because of a “digital divide”, but I’ve seen interesting programs for serving the disadvantaged that used technology as infrastructure to support local human beings who provided the ultimate interface, and that struck me as a smart way to combine technology and touch.